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New IT selection

Closed-end funds and OEICs
Trent
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Joined: May 28th, 2019, 3:22 pm

New IT selection

#225006

Postby Trent » May 28th, 2019, 3:44 pm

Hi all

I am in the process of moving 2 pension pots to my newly created AJ Bell Sipp. I have read the various threads on the Basket of 7 and 8 plus John Barons various Seasons. I have also looked at the AIC dividend heroes etc.

My question is if I were to start a new portfolio today what would be the contenders to fill a basket of 10 Investment Trusts?

My aim is to retire in 7 years time and let the dividends help with my retirement plans.

I am sure there are a few out there who would be interested to know which ITs could fill a basket for a new portfolio now.

Grateful for any discussion
Trent

tjh290633
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Re: New IT selection

#225029

Postby tjh290633 » May 28th, 2019, 5:03 pm

My inclination would be to combine one of Luniversal's baskets with F&C and Witan. They will give you a bit of capital growth and a lower yield but increasing dividends, plus a wider geographical cover.

You will be looking for dividends which you can reinvest until you need them.

TJH

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Re: New IT selection

#225096

Postby Avantegarde » May 28th, 2019, 10:50 pm

I would start with something that is not an investment trust (IT) but a tracker fund, and a global one at that. It will be much cheaper (approx. 0.1% a year in charges) and will give you an instant meaningful comparison for your ITs. In my experience many ITs fail to match their relevant index and are an expensive waste of time. Use the stats on the AIC website to work out which trusts have a decent track record of total return and, if it is important to you, raising dividends faster than inflation. I would suggest considering the following: F&C; Bankers; Scottish Mortgage; Edinburgh Worldwide; BMO Global Smaller Companies; Finsbury Growth & Income; TR Property and HG Capital. The last two are there for some diversity, as well as their actual returns. In the past five years those 8 ITs have given an average total return of 111%. Their dividends have risen by 5.5% pa, on average, in that time. Think globally. I read that there are about 2,000 companies on the UK stock market but about 50,000 worldwide.

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Re: New IT selection

#225131

Postby SKYSHIP » May 29th, 2019, 8:59 am

Trent - the piece below is my response to Spiderbill on his thread just yesterday.

The piece speaks for itself; but I would just reinforce the 2nd para - Do NOT forget Private Equity.

If I were to make just the one recommendation, it would have to be NBPE on a 21.5% discount and a 4% yield. The timing is good as it currently stands at a discount level 3pts above the sector average discount of 18.5%:

http://www.nbprivateequitypartners.com/ ... 2019vF.pdf

=====================================================================
Spiderbill - You bought in at a difficult time as 2018 was somewhat of a disappointment for many; though 2019YTD has seen a nice turn-around.
So overall your IT portfolio isn't a disaster, just rather pedestrian.

I would suggest you cash in those worthy yet uninspiring performers and switch into Private Equity and Specialist funds. Other than a few Biotech & Tech trusts, PE is the best sub-sector of the IT world.

You will find most players on The Private Equity thread over at ADVFN:

https://uk.advfn.com/cmn/fbb/thread.php3?id=26570589

Since starting that thread back in 2011 I majored on the liquidating trusts and these paid out very handsome returns as they worked through their liquidation agendas - I touch on that aspect in the thread Header.

At the moment I would suggest 3 trusts: JPEL, LMS & NBPE - all will give you currency diversification to the US$:
# JPEL is in liquidation mode on a 17% discount
# LMS is on a 31%+ discount
# NBPE is on a 21% discount whilst providing a 4% yield

I would also very strongly recommend Tetragon Financial (TFG):

https://www.edisongroup.com/publication ... ets/23895/

Read that review and you will see that at a 47% NAV discount and a 5.7% yield, TFG is remarkably GOOD VALUE

Good luck; and post on that PE thread with questions from time to time; there are a few excellent and very knowledgeable investors visiting there!

gbjbaanb
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Re: New IT selection

#225431

Postby gbjbaanb » May 30th, 2019, 8:49 am

For me right now, its all abotu diversification and defensiveness - I'm sure recession is coming soonish, as suggested by the US treasury yield curves.

But:

I have these in a portfolio for diversification:

Brunner
TRIG
Ecofin Utilities
Scottish Mortgage
Apax Global Alpha
Aberdeen Asian Income
City of London
Tritax Bigbox REIT
Aberdeen Emerging Markets
Invesco Enhanced Income.

10 trusts, widely diversified. Hope it starts you off playing with the Income tool on AIC: https://www.theaic.co.uk/income-finder/income-builder

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Re: New IT selection

#225858

Postby Longtermyieldman » May 31st, 2019, 7:23 pm

Were I the OP I'd buy a portfolio today that generates a low yield but is associated with high capital growth, with the intention of switching to higher income ITs on retirement.

Examples of growth-oriented ITs I like include Scottish Mortgage, Polar Capital Technology, Henderson Smaller Companies, BlackRock Smaller Companies, BMO Smaller Companies, Jupiter European Opportunities, Pantheon International, Worldwide Healthcare, International Biotechnology Growth, Finsbury Growth & Income.

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Re: New IT selection

#225890

Postby richfool » May 31st, 2019, 9:20 pm

Trent wrote:Hi all

I am in the process of moving 2 pension pots to my newly created AJ Bell Sipp. I have read the various threads on the Basket of 7 and 8 plus John Barons various Seasons. I have also looked at the AIC dividend heroes etc.

My question is if I were to start a new portfolio today what would be the contenders to fill a basket of 10 Investment Trusts?

My aim is to retire in 7 years time and let the dividends help with my retirement plans.

I am sure there are a few out there who would be interested to know which ITs could fill a basket for a new portfolio now.

Grateful for any discussion
Trent

I wouldn't go for outright growth trusts, as within your next 7 years timescale we are likely to have a bear market, and growth trusts will likely suffer more.

I would pick a mix of Global G&I (growth and income) trusts such as MYI and JPGI, two UK G&I's such as MUT and FGT. Then perhaps SOI for Asia Pacific, MCT and/or NAIT for North America. Plus some diversification, such as - INPP infrastructure, JLEN Renewables, and one or two REIT's such as SLI & WHR or RGL.

If you want a Global Growth trust I would suggest FRCL (F&C).

BMPI would give you some wider diversification to include biotech, healthcare and Pte Equity.
https://www.hl.co.uk/shares/shares-sear ... nc-shs-10p

My portfolio is posted here:
viewtopic.php?f=8&t=17859

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Re: New IT selection

#226026

Postby mickeypops » June 1st, 2019, 4:35 pm

Hi Trent

I’m in no way promoting my own portfolio as being suitable, but you may get some insight from what someone has actually done in this area in real life.

viewtopic.php?f=8&t=13160

I posted a six month review here.

viewtopic.php?f=8&t=16015

Good luck

MP

Trent
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Re: New IT selection

#226612

Postby Trent » June 3rd, 2019, 8:58 pm

Thanks to all for your replies

I am awaiting on the second pension to be transferred (they take their time with these transfers :roll: ) and in the meantime have come up with this provisional list. Thanks for your reply Avanteguarde on the idea of a tracker fund but if the market slides I feel that managed Investment trusts can change to suit the climate and limit the fall whereas the tracker fund will follow the market down. The only problem I am finding is the pretty high premium on any renewables trust which I would like in the portfolio. Should I ignore the premium and just buy or is there one I have missed? I may change a few before I press the final buy button so I am open to any further comments.

Bankers BNKR 2.23%
City of London CTY 4.43%
European Assets Trust EAT 3.08%
F&C FCIT 1.61%
Henderson Far East Income HFEL 6.15%
Murray International MYI 4.52%
Scottish Mortgage SMT 0.63%
TR Property TRY 3.3%
Witan WTAN 2.3%
**A Renewables Trust?

Average yield is 3.14% (Apolgies for the formatting)

Trent

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Re: New IT selection

#226620

Postby jonesa1 » June 3rd, 2019, 9:35 pm

I assume you got the yield figures from Hargreaves Lansdown. For EAT their figure is always wrong. The BMO website suggests 5.6%, which makes sense as they set the pay out to be 6% of NAV at the end of the year, paid largely out of capital. The trust trades at a discount, but it's risen in value quite a lot this year, after a big fall late last year which resulted in a significant cut to the dividend.

It's also worth looking on the AIC website to get a sense of whether the ITs have recently managed to grow their dividends (bearing in mind that this may not represent what happens for the next 5 years, it does give some idea of whether dividend growth seems important to the trust managers)

Tracking down the dividend data over a longer period is quite informative (stockopedia has a longer set of dividend data, but wants you to sign up after an initial search - incognito mode can be helpful)

Andrew

Trent
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Re: New IT selection

#226725

Postby Trent » June 4th, 2019, 10:10 am

Thanks for the info Andrew. I have joined the AIC as a new member and will spend the next week or so going over the website (I see there is a separate thread on the board).

Trent

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Re: New IT selection

#226872

Postby midgesgalore » June 4th, 2019, 3:41 pm

Trent wrote:Thanks to all for your replies

I am awaiting on the second pension to be transferred (they take their time with these transfers :roll: ) and in the meantime have come up with this provisional list. Thanks for your reply Avanteguarde on the idea of a tracker fund but if the market slides I feel that managed Investment trusts can change to suit the climate and limit the fall whereas the tracker fund will follow the market down. The only problem I am finding is the pretty high premium on any renewables trust which I would like in the portfolio. Should I ignore the premium and just buy or is there one I have missed? I may change a few before I press the final buy button so I am open to any further comments.

Bankers BNKR 2.23%
City of London CTY 4.43%
European Assets Trust EAT 3.08%
F&C FCIT 1.61%
Henderson Far East Income HFEL 6.15%
Murray International MYI 4.52%
Scottish Mortgage SMT 0.63%
TR Property TRY 3.3%
Witan WTAN 2.3%
**A Renewables Trust?

Average yield is 3.14% (Apolgies for the formatting)

Trent


Regarding the renewable trust, BusyBumbleBee put up a cracking thread
https://www.lemonfool.co.uk/viewtopic.php?f=8&t=17343

Read that for his take on renewables. I bought UKW two weeks ago (not a recommendation of course).

midgesgalore

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Re: New IT selection

#227513

Postby Hariseldon58 » June 6th, 2019, 3:34 pm

Perhaps the OP might consider some vanilla ETF index trackers ?

Investment Trusts have a fair few wrinkles and complications that are unnecessary for what I gather is a slightly less experienced investor.

The overall asset allocation is likely to be of greater importance than which particular investment trust.

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Re: New IT selection

#227743

Postby TahiPanasDua » June 7th, 2019, 12:02 pm

richfool wrote:
Trent wrote:Hi all

I would pick a mix of Global G&I (growth and income) trusts such as MYI and JPGI, two UK G&I's such as MUT and FGT. Then perhaps SOI for Asia Pacific, MCT and/or NAIT for North America.


Nothing wrong with JPGI as a choice but you have to be aware of the differences between this IT and most other growth and income offerings.

Until a couple of years ago, IIRC, JPGI was a more mainstream growth and income IT. It then officially changed strategy to what is essentially a growth IT offering a high yield, if necessary from capital. This allowed it to choose shares with a higher growth potential, currently showing as around 220% over 10 years with a yield of around 4%. Nothing wrong with that as long as you know. It is possible to hypothesise at the moment that JPGI's big investment in US growth shares could suffer disproportionately to other Global GI ITs if there is any reversal of the present 10 year boom. (sorry haven't checked any of my facts recently)

TP2.

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Re: New IT selection

#228185

Postby Bena48 » June 9th, 2019, 7:24 pm

Trent wrote:Hi all

I am in the process of moving 2 pension pots to my newly created AJ Bell Sipp. I have read the various threads on the Basket of 7 and 8 plus John Barons various Seasons. I have also looked at the AIC dividend heroes etc.

My question is if I were to start a new portfolio today what would be the contenders to fill a basket of 10 Investment Trusts?

My aim is to retire in 7 years time and let the dividends help with my retirement plans.

I am sure there are a few out there who would be interested to know which ITs could fill a basket for a new portfolio now.

Grateful for any discussion
Trent


I am interested how you would go about buying your portfolio.

Will you purchase a holding at a time or purchase each holding in stages over a period ? I presume that given the relatively short investment period you will want to get on with it.

Trent
Posts: 4
Joined: May 28th, 2019, 3:22 pm

Re: New IT selection

#228312

Postby Trent » June 10th, 2019, 12:01 pm

Hi Bena48

My intention is to buy 10 Investment Trusts once the money arrives in my account. I may however hold off if the NAV is too high. That is why I was querying the NAVs for the Renewable ITs - seemed high. Although to be honest in the broad scheme of things I may just buy anyhow.

At the moment I am still waiting on the funds to arrive and still reading up on the various replies I have had so thanks to all.

Cheers
Trent

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Re: New IT selection

#228349

Postby gbjbaanb » June 10th, 2019, 1:42 pm

Trent wrote:Thanks to all for your replies

I am awaiting on the second pension to be transferred (they take their time with these transfers :roll: ) and in the meantime have come up with this provisional list. Thanks for your reply Avanteguarde on the idea of a tracker fund but if the market slides I feel that managed Investment trusts can change to suit the climate and limit the fall whereas the tracker fund will follow the market down. The only problem I am finding is the pretty high premium on any renewables trust which I would like in the portfolio. Should I ignore the premium and just buy or is there one I have missed? I may change a few before I press the final buy button so I am open to any further comments.

Bankers BNKR 2.23%
City of London CTY 4.43%
European Assets Trust EAT 3.08%
F&C FCIT 1.61%
Henderson Far East Income HFEL 6.15%
Murray International MYI 4.52%
Scottish Mortgage SMT 0.63%
TR Property TRY 3.3%
Witan WTAN 2.3%
**A Renewables Trust?

Average yield is 3.14% (Apolgies for the formatting)

Trent


an alternative to the renewables trust might be Ecofin utilities - utilities will be on the edge of renewables and just as "safe and boring". Ecofin is currently on a fair discount to NAV as well, its a global utilities trust which could be why the discount is there.

I'd also consider Aberdeen Asian Income instead of HFEL, as its performance appears roughly the same, but is on a discount too. Less of a yield though.

As for CTY, I prefer JP Claverhouse - CTY is pretty much a FTSE tracker, someone compared its performance to the FTSE 250 on the AIC site and found it didn't diverge much.

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Re: New IT selection

#228434

Postby monabri » June 10th, 2019, 5:34 pm

Here's a comparison of CTY versus the FTSE All Share & FTSE 250 (*)

https://www.hl.co.uk/funds/fund-discoun ... ion/charts

(This image was generated using the free tools available at Hargreaves-Landsdown - link below)

I found it best to select "Equity" from the "Choose an Investment" options and then enter the ticker code for the investment trust.

As shown, there is not a lot of difference over 5 years between total return for CTY versus FTSE All Share (I'd say that it is slightly below the FTSE250 index over 5 years).



Image



(* as they say, "other indices are available"...well over 2500+)

Luniversal
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Re: New IT selection

#228690

Postby Luniversal » June 11th, 2019, 1:38 pm

gbjbaanb wrote:[q

As for CTY, I prefer JP Claverhouse - CTY is pretty much a FTSE tracker, someone compared its performance to the FTSE 250 on the AIC site and found it didn't diverge much.


City of London's accounts for the year to Jun. are due in late Sep. Meanwhile here are some long-distance stats covering the 37 years from Jul. 1981 to Jul. 2018.

CTY gained 0.8% pa more than the All-Share Index in net asset value per share (NAV), and 1.6% pa more in share price as the discount closed. The trust saw post-inflationary rises in 21 of 36 years for NAV and in 24 for share price. It beat the index in 23 of 36 years on price, and in 22 on NAV.

For the decade to Jun. 2018, respective average gains were 0.7% pa above the All-Share on NAV, 2.0% on price. Both measures included outperformance in seven of ten years.

Meanwhile City of London's per-share dividend had a real (post-RPI) rise of 4.5% pa compound over 36 years, with annual increases above inflation in all but five. In no financial year since 1981-82 has the payout declined by more than 5% in real terms.

In the decade to 2018, dividend growth shrank to 2.0% pa compound, taking in two FYs during the global crisis when it rose by less than the cost of living.

The trust's average yield over the whole period from 1980 has been 3.9% at financial year ends: 0.7 percentage points above the All-Share's. In the latest decade it was 4.5% versus 3.6%, an edge of one-quarter. CTY has never yielded the same or less than the market, usually considerably more.

The year-end discount averaged 6.9% since 1981 but has tended to move to a premium latterly; shares sold on average at par with NAV in 2008-18.

This is not 'pretty much a tracker'; its showing is somewhat superior to the market. One expects to pay a price for this in volatility. CTY's standard deviation of year-end price changes was 16.9, compared with 15.7 for the All-Share's index value changes. Not a huge difference.

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Re: New IT selection

#228699

Postby gbjbaanb » June 11th, 2019, 2:35 pm

Luniversal wrote:
gbjbaanb wrote:As for CTY, I prefer JP Claverhouse - CTY is pretty much a FTSE tracker, someone compared its performance to the FTSE 250 on the AIC site and found it didn't diverge much.


City of London's accounts for the year to Jun. are due in late Sep. Meanwhile here are some long-distance stats covering the 37 years from Jul. 1981 to Jul. 2018.

CTY gained 0.8% pa more than the All-Share Index in net asset value per share (NAV), and 1.6% pa more in share price as the discount closed. The trust saw post-inflationary rises in 21 of 36 years for NAV and in 24 for share price. It beat the index in 23 of 36 years on price, and in 22 on NAV.

For the decade to Jun. 2018, respective average gains were 0.7% pa above the All-Share on NAV, 2.0% on price. Both measures included outperformance in seven of ten years.


Interesting, I only looked at the pritty graphs, eg a FTSE 100 tracker v CTY looks remarkably similar, and for the last year the tracker has outperformed it, but only by a bit and only for a year so who's counting.

But can you compare CTY to the all-share index, or skew it to FTSE 100 or 350 as I thought it was much more heavily invested in the larger stocks?


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